Dimensional Media Assoc. v. Optical Products Dev.

Decision Date25 March 1999
Docket NumberNo. 98 CIV. 6552(DC).,98 CIV. 6552(DC).
Citation42 F.Supp.2d 312
PartiesDIMENSIONAL MEDIA ASSOCIATES, INC., Plaintiff, v. OPTICAL PRODUCTS DEVELOPMENT CORP., Kenneth Westort, and Douglas Robinson, Defendants.
CourtU.S. District Court — Southern District of New York

Brown Raysman Millstein Felder & Steiner LLP by Louis Greco, Henry J. Silberberg, Andrew Miller, New York, for Plaintiff.

Brown, Pinnisi & Michaels, P.C by Michael D. Pinnisi, Theodore Lyons Araujo, Ithaca, NY, for Defendants.


CHIN, District Judge.

In this patent infringement case, defendants move to dismiss the complaint or to transfer the action pursuant to Federal Rule of Civil Procedure 12(b)(3) for improper venue. For the reasons stated below, the motion is granted and the complaint is dismissed without prejudice to refiling in any district where venue would be proper.

A. The Facts

Dimensional Media Associates ("DMA") is a Delaware corporation with its principal place of business in New York City. (Compl. ¶ 1). DMA is engaged in the business of designing, developing, manufacturing, licensing, selling, and leasing optical and three-dimensional display technology products. (Id.). DMA has obtained three patents relating to its optical technology. (Id. ¶ 10 and Exs. A, B, C). The patents were issued on February 7, 1989, May 10, 1994, and September 3, 1996. (Id.). To protect what it deems confidential information, DMA limits access to information concerning its business, operations, and technology to "those with a business need to know it." (Id. ¶ 12). Individuals who are given access to DMA's confidential information are required to sign confidentiality agreements. (Id.)

Defendant Optical Products Development Corporation ("OPD") is a corporation with its principal place of business, manufacturing facility, and executive offices in Elmira in the Western District of New York. (Id. ¶ 2; see also Westort Aff. ¶¶ 5-6, 12). OPD does not maintain offices in the Southern District of New York, nor has it retained agents to conduct business in the Southern District. (Westort Aff. ¶¶ 8-11, 13). Defendants Kenneth Westort and Douglas Robinson are part owners, officers, agents and/or representatives of OPD. (Compl. ¶ 3). Westort and Robinson live in Tompkins County in the Northern District of New York. (Westort Aff. ¶¶ 3, 4). Both Westort and Robinson formerly worked for DMA — Westort was DMA's Vice President and Director of Optical Engineering from January 1995 through August 1996, and Robinson was a DMA consultant during "most of 1996." (Compl. ¶¶ 3-4).

In 1994, Westort worked as a consultant for EMF Corporation, a company that had requested an evaluation of certain DMA products. (Id. ¶ 13). Pursuant to a Confidentiality and Nondisclosure Agreement that Westort signed in 1994 while working for EMF, Westort was given and had access to DMA's confidential information. In January 1995, when Westort became DMA's Vice President, Westort signed another Confidentiality and Nondisclosure Agreement. During his tenure with DMA, Westort continued to have access to confidential information about DMA. (Id.). In or about September 1996, Westort's employment with DMA was terminated purportedly because of unsatisfactory job performance. (Id. ¶ 14). Westort thereafter joined Robinson as part owner and officer of OPD.

Robinson also executed DMA's Confidentiality and Nondisclosure Agreement in 1996 when he was employed by DMA as a consultant. In that capacity, Robinson had access to confidential information concerning the company. (Id. ¶ 15). It is not clear when Robinson's employment as a consultant to DMA ended. In November 1996, however, Robinson incorporated OPD. (Greco Aff. Ex. B (Robinson Dep. at 13)). Thereafter, on December 11, 1996, OPD executed a work and license agreement with DMA whereby DMA agreed to purchase, own, and install equipment "designated by OPD" to be located at OPD's manufacturing facility in Elmira. (Compl. ¶ 17). In exchange, OPD agreed to produce DMA's patented, optical mirror components. (Id. ¶ 17). The work and license agreement included "confidentiality and non-disclosure provisions," and OPD was given and had access to DMA's confidential information pursuant to the agreement. (Id. ¶ 16).

When OPD allegedly "failed to provide mirrors [to DMA] according to agreed-upon schedules, the relationship [between OPD and DMA] was terminated." (Pl. Opp. at 6). Although DMA does not indicate when the parties' "relationship was terminated," OPD attests that the contractual relationship was terminated on January 16, 1998. (Defs. Reply Aff. ¶ 4).

B. Prior Proceedings

Sometime prior to September 1998, DMA commenced an action in Supreme Court, New York County, alleging that OPD breached its contractual obligations to DMA, and asserting claims for nonperformance, misrepresentation, and fraud with respect to the work and license agreement. (Compl. ¶ 19). DMA filed this action on September 16, 1998, asserting claims for patent infringement, misappropriation of trade secrets, and unfair competition. The Supreme Court stayed DMA's suit sua sponte in light of the instant suit. (Greco Aff. ¶ 3).1 The parties conducted discovery, limited to the issue of venue. This motion followed.

C. DMA's Patent Infringement Allegations

DMA contends that on or about September 13, 1998, it became aware that OPD had placed an advertisement in the September 1998 edition of a trade publication entitled "Display & Design Ideas" for a product that "appears to be a mirror-image of products embodying DMA's Optical Display Technology." (Compl. ¶ 20). About the same time, DMA learned that OPD had displayed this product at a trade fair, representing that OPD was DMA's optical components supplier. Based on the prior relationship between the parties, the "strong similarity to DMA's products," and OPD's misrepresentations to potential DMA customers, DMA "reasonably ... inferred" that OPD was infringing DMA's patents and misappropriating DMA's confidential information. (Id.).

The complaint does not allege where the trade fair was held or where the trade publication was published, and there is no factual allegation in the complaint or in DMA's opposition to the motion that any of the infringing activities took place in the Southern District of New York.2 Rather, DMA asserts that "[u]pon information and belief, Defendants have directly infringed, contributorily infringed, and induced infringement of ... DMA Patents by making, importing into the United States, offering for sale, selling, renting and using, in this District and elsewhere in the United States ... technology and products embodying the inventions claimed in DMA Patents." (Id. ¶ 23 (emphasis added)). There is no allegation as to when any of these alleged acts of infringement occurred.

A. Applicable Legal Standards

Venue in patent infringement actions is governed by 28 U.S.C. § 1400(b), which provides:

Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

28 U.S.C. § 1400(b). Hence, there are two possibilities for venue in a patent infringement case: (1) the district where the defendant "resides"; or (2) the district where the defendant has "committed acts of infringement" and has a regular place of business.

In determining where a corporate defendant "resides," the court looks to 28 U.S.C. § 1391(c), which provides that:

[A] corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State.

28 U.S.C. § 1391(c); see also Exovir, Inc. v. Mandel, No. 94 Civ. 3546, 1995 WL 413256, at *1 (S.D.N.Y. July 12, 1995) (holding that § 1391(c) applies to patent venue statue) (citing Kinetic Instruments, Inc. v. Lares, 802 F.Supp. 976, 988 (S.D.N.Y.1992); Rocket Jewelry Box, Inc. v. Noble Gift Packaging, Inc., 869 F.Supp. 152, 155 (S.D.N.Y.1994)). For purposes of the patent infringement venue statute, then, a corporation "resides" in any district in which it is subject to jurisdiction, including, for example, any district in which it is subject to long-arm jurisdiction.

Section 1391(c) does not apply to individual defendants, however, and therefore venue in patent cases lies with respect to individual defendants only in the districts identified in § 1400(b). See Mickowski v. Visi-Trak Corp., 36 F.Supp.2d 171, 176 (S.D.N.Y.1999) (finding venue proper as to corporate but not individual defendants); Imagineering, Inc. v. Van Klassens, Inc., 797 F.Supp. 329, 332-33 n. 1 (S.D.N.Y.1992) (noting that if corporate officer were sued in individual rather than official capacity, "serious questions would be raised as to whether" individual defendant resides in same district as corporation).3

In determining whether venue is proper under the residence prong of § 1400(b) as to OPD, the Court must determine whether OPD was subject to personal jurisdiction in the Southern District of New York, treating the district as if it were a separate state. See also Rocket, 869 F.Supp. at 157 (explaining that where state has more than one judicial district, for venue to be properly laid defendant must be subject to personal jurisdiction in district where action was commenced as if district were separate state).

Personal jurisdiction over a non-resident defendant "is governed by the law of the state in which the court sits — subject, of course, to certain constitutional limitations of due process." Kronisch v. United States, 150 F.3d...

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